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Inside this issue...
Advertising Guidelines ................. 6
Certificates Issued .......................... 7
Consent Orders............................... 2
Dial Us Direct.................................. 6
FASB’s Views on Fair Value ......... 5
GASB Revises Standards............... 4
Has Your Address Changed? ....... 4
Independence Requirements ........ 5
Licensing Activity .......................... 4
Notice of Address Change ............ 8
Spotlight Rule ................................. 6
State Tax Forms Get New Look ... 3
Activity Review
North Carolina State
Board of Certified Public
Accountant Examiners
Suite 104, 1101 Oberlin Road, Post Office Box 12827, Raleigh, NC 27605- 2827 ( 919) 733- 4222 No. 2 2000
www. state. nc. us/ cpabd
Important Information for
Successful Exam Candidates
Successful examination candidates who
want to avoid meeting the Board’s 150-
hour education requirement for licen-sure
must submit a properly completed
application for licensure to the Board
prior to December 31, 2000.
The deadline is a result of legisla-tion
passed in July 1997 ( see Activity
Review 8- 1997) which states that to be
eligible to receive a certificate of quali-fication
to practice as a CPA in North
Carolina, individuals who apply for
licensure after December 31, 2000, must
satisfactorily complete 150 semester
hours of college- level coursework in-cluding
a bachelors degree with a con-centration
in accounting.
In addition, the legislation requires
that individuals applying for licensure
after December 31, 2000, must meet at
least one of the following work experi-ence
requirements: one year of experi-ence
in the field of accounting under
the direct supervision of a properly
licensed CPA; four years of experience
in the field of accounting; four years of
experience teaching accounting in a
regionally accredited four- year college
or university; four years of experience
teaching college transfer accounting
courses at a regionally accredited com-munity
college or technical institute; or
any combination of the above experi-ence
determined by the Board to be
substantially equivalent.
These changes in the experience
requirements apply only to applica-tions
for licensure postmarked or re-ceived
after December 31, 2000.
Successful exam candidates will
not be affected by the 150- hour educa-tion
requirement unless they do not:
• complete the current work ex-perience
requirement pursuant to
21 NCAC 8F .0401; and
• submit a completed applica-tion
for certification, including sup-porting
documentation, to the Board
prior to December 31, 2000.
Exam candidates who have not
yet passed all four parts of the exam
will not be affected by this legislation
unless they do not:
• pass all sections of the Uni-form
CPA Examination pursuant to
21 NCAC 8F .0105;
• complete the current work ex-perience
requirement pursuant to
21 NCAC 8F .0401; and
• submit a completed applica-tion
for certification, including sup-porting
documentation, to the Board
prior to December 31, 2000.
Keep in mind, the legislation ap-plies
to certificate applications post-marked
or received after December
31, 2000, and individuals who do not
complete the work experience require-ment
and submit a complete applica-tion
for licensure prior to the deadline
will be required to comply with the
150- hour education requirement be-fore
receiving a North Carolina CPA
certificate.
If you have any questions about
the 150- hour education requirement for
licensure and how it affects exam can-didates,
please visit the Board’s web
site ( www. state. nc. us/ cpabd) and re-view
the in- depth information, includ-ing
the applicable statues and rules, on
the requirement.
If you have questions not answered
by the information on the web site, you
may contact the Board by telephone at
( 919) 733- 4222; by fax at ( 919) 733- 4209;
by e- mail at licensing@ mindspring. com;
or by mail at PO Box 12827, Raleigh,
NC 27605- 2827.
Remember, the 150- hour education
requirement applies to applications for
licensure received after December 31,
2000; the requirement has no bearing
on sitting for the Uniform CPA exam.
2
Consent Orders
Roland S. Hankerson, # 15793
Rocky Mount, NC 12/ 20/ 99
Phillip D. Morgan, # 21809
Birmingham, AL 12/ 20/ 99
THIS CAUSE, coming before the Board
at its offices at 1101 Oberlin Road, Ra-leigh,
Wake County, North Carolina,
with a quorum present. Pursuant to
NCGS 150B- 41 and 150B- 22, the Board
and Respondent stipulate the follow-ing
Findings:
1. Respondent was the holder of North
Carolina certificate number 15793 as a
Certified Public Accountant.
2. On June 22, 1998, the Board ordered
that Respondent’s certificate be sus-pended
for at least thirty ( 30) days for
failure to obtain a State Quality Review
( SQR) prior to the prescribed comple-tion
date. Said Order further stated
that the suspension of Respondent’s
certificate would not be rescinded by
the Board until such time as he pro-vided
the Board with documentation
that his firm’s SQR had been completed.
3. Board staff sent the Board’s Order
by certified/ return receipt mail to Re-spondent
at his last known business
address. Respondent returned his sus-pended
certificate to the Board office
on July 7, 1998.
4. In April of 1999, Respondent filed an
application with the Board for the
reissuance of Respondent’s CPA cer-tificate.
On said application, Respon-dent
indicated that, during the period
of his suspension, he had never
changed his firm’s office sign to delete
reference to his firm as a CPA firm and
continued to offer professional services
as a CPA.
5. With his application, Respondent
submitted a moral character affidavit
from a CPA stating that Respondent
had informed him that he had prob-lems
with his SQR but failed to inform
the CPA signing the affidavit that
Respondent’s certificate was sus-pended
in June of 1998.
6. Respondent wishes to resolve this
matter by consent and agrees that the
Board staff and counsel may discuss
this Order with the Board ex parte,
whether or not the Board accepts this
Order as written.
BASED UPON THE FOREGOING, the
Board makes the following Conclu-sions
of Law:
1. Respondent is subject to the provi-sions
of Chapter 93 of the North Caro-lina
General Statutes ( NCGS) and Title
21, Chapter 8 of the North Carolina
Administrative Code ( NCAC), includ-ing
the Rules of Professional Ethics
and Conduct promulgated and
adopted therein by the Board.
2. Respondent’s actions as set out above
constitute violations of NCGS 93- 3, 93-
4, 93- 6 , and 93- 12( 9) e and 21 NCAC 8N
.0202( b)( 9), .0203( b)( 3).
BASED ON THE FOREGOING and in
lieu of further proceedings under 21
NCAC Chapter 8C, the Board and Re-spondent
agree to the following Order:
1. Respondent is censured.
2. Respondent’s license shall be sus-pended
for one ( 1) year from the date
this Order is approved by the Board;
however, said suspension is stayed.
3. As a condition of the stay of his
suspension, Respondent shall be on
probation, shall comply with the terms
of this Order, and shall violate no ac-countancy
statutes or rules for two ( 2)
years from the date this Order is ap-proved
by the Board.
4. Respondent shall pay a one thou-sand
dollar ($ 1,000.00) civil penalty to
be remitted with this signed Order.
5. Respondent shall reimburse the
Board five hundred dollars ($ 500.00)
in administrative costs incurred in the
costs of this investigation. Said admin-istrative
costs shall be remitted with
this signed Order.
6. Respondent shall obtain preissuance
review of all audits, reviews, and com-pilations
until Respondent’s firm re-ceives
an unqualified opinion on a peer
review which includes a review of at
least one audit, one review, and one
compilation. The reviewer for the
preissuance review shall be approved
by the Board prior to performing said
reviews.
7. Respondent agrees that failure to
timely comply with the terms of this
Order or with all accountancy statutes
and rules during the two ( 2) year pro-bationary
period shall be deemed suf-ficient
grounds for imposition of the
one ( 1) year suspension of
Respondent’s license in addition to any
other discipline as assessed for the fu-ture
violation.
8. Respondent agrees to cooperate at
all times with the Board in the supervi-sion
and investigation of compliance
with this settlement agreement and
agrees to make all files, records, or
other documents available immedi-ately
upon the demand of the Board.
THIS CAUSE, coming before the Board
at its offices at 1101 Oberlin Road,
Raleigh, Wake County, North Caro-lina,
with a quorum present. Pursuant
to NCGS 150B- 41 and 150B- 22, the
Board and Respondent stipulate the
following Findings:
1. Respondent is the holder of North
Carolina certificate number 21809 as a
Certified Public Accountant.
2. Respondent admits the truth of the
factual allegations made against him
in the attached Summons and Com-plaint
issued by the Alabama State
Board of Public Accountancy.
3. Respondent wishes to resolve this
matter by consent and agrees that the
Board staff and counsel may discuss
this Order with the Board ex parte,
whether or not the Board accepts this
Order as written.
BASED UPON THE FOREGOING, the
Board makes the following Conclu-sions
of Law:
1. Respondent is subject to the provi-sions
of Chapter 93 of the North Caro-lina
General Statutes ( NCGS) and Title
21, Chapter 8 of the North Carolina
Administrative Code ( NCAC), includ-ing
the Rules of Professional Ethics
and Conduct promulgated and
adopted therein by the Board.
2. Respondent’s actions as set out
above constitute violations of
3
NCGS 93- 12( 9) d and e, and 21 NCAC
8N .0103, 8N .0201, 8N .0202( a), 8N
.0202( b)( 2), 8N .0203, 8N .0204, 8N. 0402,
and 8N .0403.
BASED ON THE FOREGOING and in
lieu of further proceedings under 21
NCAC Chapter 8C, the Board and Re-spondent
agree to the following Order:
1. Respondent’s license is suspended
until June 24, 2000, to run concurrently
with the suspension of Respondent’s
Alabama certificate. Respondent must
return his North Carolina certificate
with this signed Order.
2. Respondent must comply with all
requirements mandated by his Con-sent
Order with the Alabama State
Board of Public Accountancy.
3. Respondent may, after the reinstate-ment
of his Alabama certificate and
permit to practice, apply to return his
North Carolina certificate to active sta-tus
by submission and approval of a
reissuance application which includes:
a. Application form,
b. Payment of the application fee,
c. 3 moral character affidavits, and
d. 40 hours of CPE in the 12 months
preceding the application including an
8 hour accountancy law course pursu-ant
to 21 NCAC 8F .0504.
4. Respondent agrees to cooperate at
all times with the Board in the supervi-sion
and investigation of compliance
with this settlement agreement and
agrees to make all files, records, or
other documents available immedi-ately
upon the demand of the Board.
Jung Sook Lee, # 19864
Charlotte, NC 1/ 24/ 00
THIS CAUSE, coming before the Board
at its offices at 1101 Oberlin Road, Ra-leigh,
Wake County, North Carolina,
with a quorum present. Pursuant to
NCGS 150B- 41 and 150B- 22, the Board
and Respondent stipulate the follow-ing
Findings:
1. Respondent is the holder of North
Carolina certificate number 19864 as a
Certified Public Accountant and ren-ders
attest services.
2. On September 18, 1995, the Board
ordered, pursuant to 21 NCAC 8J .0011
( currently 8J .0111), that the
Respondent’s certificate be suspended
for at least thirty ( 30) days for failure to
obtain a State Quality Review ( SQR)
prior to the prescribed completion date.
Said Order further stated that the sus-pension
of Respondent’s certificate
would be stayed based Respondent’s
notification that the SQR had been com-pleted.
3. By written notice dated April 22,
1996, and a prior firm renewal notice
provided to Respondent in November
of 1995, Respondent was notified of a
new SQR deadline of September 6, 1998;
however, pursuant to NCGS 93- 12( 8c)
and 21 NCAC 8M .0102( b), Respon-dent
was allowed until December 31,
1998, to complete her second SQR.
4. In November of 1999, Respondent
provided the Board with a copy of her
firm’s peer review letter which was
completed July 28, 1999, in excess of
one hundred twenty ( 120) days after
the required completion date.
5. Respondent wishes to resolve this
matter by consent and agrees that the
Board staff and counsel may discuss
this Order ex parte, whether or not the
Board accepts this Order as written.
BASED UPON THE FOREGOING, the
Board makes the following Conclu-sions
of Law:
1. Respondent is subject to the provi-sions
of Chapter 93 of the North Caro-lina
General Statutes ( NCGS) and Title
21, Chapter 8 of the North Carolina
Administrative Code ( NCAC), includ-ing
the Rules of Professional Ethics
and Conduct promulgated and
adopted therein by the Board.
2. Respondent’s failure to timely ob-tain
a SQR prior to the prescribed
completion date is a violation of NCGS
93- 12( 8c) and 21 NCAC 8M .0102.
BASED ON THE FOREGOING and in
lieu of further proceedings under 21
NCAC Chapter 8C, the Board and Re-spondent
agree to the following Order:
1. Respondent’s certificate is sus-pended
for ninety ( 90) days.
2. Respondent shall return her sus-pended
certificate to the Board along
with the submission of this Consent
Order.
3. After at least ninety ( 90) days, Re-spondent
may apply to return her cer-tificate
to active status by submission
and approval of a reissuance applica-tion
which includes:
a. Application form,
b. Payment of the application fee,
c. 3 moral character affidavits, and
d. 40 hours of CPE in the 12 months
preceeding the application including
an 8 hour accountancy law course pur-suant
to 21 NCAC 8F .0504.
State Tax Forms Get
New Look
State taxpayers will notice something
different about their 1999 North
Carolina Individual Income Tax
forms.
Starting this year, the North
Carolina Department of Revenue
( DOR) will use a new, state- of- the
art electronic system to process
North Carolina Individual Income
tax returns and payments. Although
most questions are still the same, the
forms’ designs are different.
Some things taxpayers will no-tice
on the new forms include bar
codes ( a system of thick and thin
lines used to store information elec-tronically)
along the edge of the
forms; rectangles where numbers
should be written; and circles to be
filled in as responses to some ques-tions.
Taxpayers with questions can
call ( 919) 733- 4684 Monday through
Friday from 8 a. m. to 5 p. m. to reach
someone at the DOR. “ NC Tax Talk,”
a prerecorded information line, is
available 24 hours a day. The num-ber
is ( 919) 733- 4829.
4
Reissuances
Michael Keith Eastwood # 18783
Lake Warren Woods, Jr. # 12926
Reinstatements
Stanley Wayne Belk # 19722
Walter Greene Church, Jr. # 16076
Douglas Younge Cobb # 7959
Dennis Allen Hayes # 20963
Saundra Gail Holloman # 22217
Bruce Johnson Lamond # 12879
Richard Webb Pipes # 9507
Penny Brooks Russ # 13604
CPE Sponsors
Interactive Business Solutions-
Salisbury
Mark R. Kean- Raleigh
Moss Adams Advisory Services-
Seattle, WA
UNC- W Dept. of Accounting &
Business Law- Wilmington
Licensing Activity
January 2000 In a move that broadens the recent
historic changes in governmental ac-counting
to encompass public colleges
and universities, the Governmental
Accounting Standards Board ( GASB)
published new standards for external
financial reporting by these institutions.
Public colleges and universities
will now follow the financial reporting
standards the GASB approved in June
1999, which considerably revised the
look and contents of state and local
government financial statements.
“ The objective of the new stan-dards
is to enhance the understand-ability
and usefulness of public college
and university financial statements,”
said GASB Project Manager Joseph
Blythe.
“ GASB believes that the informa-tion
provided will better meet the needs
of those who use financial reports is-sued
by institutions of higher educa-tion.”
The new standards— known as
GASB Statement No. 35, “ Basic Financial
Statements and Management’s Discussion
and Analysis for Public Colleges and Uni-versities,”
amend GASB Statement No.
34, which dramatically changed how
state and local governments report their
finances.
Statement No. 35 effectively ex-tends
the guidance of the new govern-mental
financial reporting model to
include public colleges and universi-ties.
According to the new standards,
the separately issued financial state-ments
of public colleges and universi-ties
will include:
• Management’s discussion
and analysis: a narrative overview
and analysis, prepared by the
institution’s finance officers, of the
information in the institution’s fi-nancial
statements focusing on the
reasons for changes in the public
institution’s financial position from
one year to the next;
• Basic financial statements:
public colleges and universities will
prepare the appropriate financial
statements stipulated by Statement
34 for special- purpose governments
engaged in ( a) business- type activi-ties;
( b) government- type activities;
or ( c) both; and
• Notes to the financial statements.
One of the most significant changes
for public colleges and universities is
the requirement to amortize capital
asset costs over the useful lives of those
assets. This cost allocation should pro-vide
a better measure of the costs of
providing instruction, research, and
other services.
This more business- like approach
is currently required for private col-leges
and universities and should bring
more financial reporting comparabil-ity
to the higher education industry.
Financial reporting under these
new standards should give a clearer
picture of the overall financial health
of public colleges and universities.
According to Blythe, the new stan-dards
for public colleges and universi-ties
should provide more and better
information for a wider range of users
than was previously available.
“ The information will also be more
comparable to the financial statements
of private colleges and universities,”
he explained.
Colleges and universities that are
a unit of a state or local government
will implement the new standards at
the same time as their primary govern-ment,
generally for fiscal years begin-ning
July 1, 2001.
Copies of GASB Statement No. 35,
“ Basic Financial Statements and
Management’s Discussion and Analysis
for Public Colleges and Universities,” are
available from the GASB Order De-partment
via telephone ( 1- 800- 748-
0659), e- mail ( gasbpubs@ gasb. org), and
mail ( 401 Merritt 7, PO Box 5116,
Norwalk CT 06856- 5116).
GASB Revises Public College and University
Financial Reporting Standards
21 NCAC 8J .0107 requires written
notice of any change of address or
business location. Because the rule
requires that the notification be
made in writing, staff members can-not
accept an oral change of ad-dress.
You may mail or fax the “ Notice of
Address Change” located on the
back cover of the Activity Review to
the Board’s Licensing Section. You
may also e- mail the change( s) to
licensing@ mindspring. com.
Exam candidates should also no-tify
the Board of any changes in
their address or phone number. Sim-ply
mail or fax the “ Notice of Ad-dress
Change” to the Examinations
Section of the Board. You may also
e- mail the change( s) to
examinations@ mindspring. com.
Has Your Address Changed?
5
FASB Offers Views on Fair Value
The Financial Accounting Standards
Board ( FASB) has published its pre-liminary
views on measuring finan-cial
instruments at fair value. The
document is the next step in a FASB
project related to financial instrument
issues.
The preliminary views cover
three core issues— what would be re-ported
at fair value; what is fair value;
and how would changes in fair value
be reported.
According to FASB’s preliminary
views, financial instruments, as de-fined
in the document, would be mea-sured
and recorded at fair value.
Financial instruments are defined
as cash; ownership interest in an en-tity;
contractual obligations to deliver
financial instruments to another en-tity
and that entity’s contractual rights
to receive them; or contractual obli-gations
for one entity to exchange
financial instruments with another and
the second entity’s contractual rights
to require the exchange.
Fair value of a financial instrument
would be its estimated market exit
price. The issue of where to report
changes in fair value may become moot
if FASB decides that enhanced disclo-sure
alone is sufficient. However, if
FASB decides to require reporting
changes in fair value, those changes
would be reported in net income.
According to Ron Lott, a FASB
project manager, FASB is “ committed
to working toward resolving the con-ceptual
and practical issues related to
determining the fair value of financial
instruments, an effort discussed in
FASB Statement 133 on derivatives.”
“ Although FASB members see
conceptual reasons to measure finan-cial
instruments at fair value, they have
not decided when, if ever, it will be
feasible to require them to be re-ported
at fair value in the basic finan-cial
statements,” explained Lott.
“ Although it has made prelimi-nary
decisions about the definitions
of financial instruments and fair value
and general guidance for determin-ing
fair value,” Lott said, “ FASB
needs more information about the
potential problems and solutions for
reporting financial instruments at fair
value. Publishing FASB’s prelimi-nary
views at this time is intended to
solicit that information.”
Copies of the preliminary views
are available from the FASB web site
( www. fasb. org) under “ Exposure
Drafts” or from the FASB Order De-partment
at 1- 800- 748- 0659. Com-ments
on the preliminary views are
requested by May 31, 2000.
The American Institute of CPAs
( AICPA) has strengthened its indepen-dence
requirements for auditors of
public companies.
New rules, which the executive
committee of the SEC practice section
of the AICPA division for firms ( SECPS)
approved and which are intended to
bolster investor confidence in financial
reporting, took effect January 1, 2000.
The rules address business and fi-nancial
relationships that could create
a conflict of interest and undermine
auditor independence if entered into
by an auditor, his or her spouse, or a
dependent.
Each of the SECPS’s 1,300 member
firms is required to establish a policy
prohibiting auditors from engaging in
such relationships.
Each firm also must designate as
its “ independence champion” a part-ner
who will see that the professional
audit staff has all the information
needed to comply with the new rules.
In addition, all audit professionals
must, when they are hired and after-ward,
undergo training in the new re-quirements,
attend periodic refresher
courses and certify that they have read,
understood and complied with the
firm’s independence policy.
Susan Coffey, AICPA vice presi-dent
of self- regulation and the SECPS,
said, “ Independence and related qual-ity
controls are ‘ top of mind’ for the
profession.” She stressed the need for
SECPS member firms’ leadership to set
the ‘ appropriate tone’ and make cer-tain
compliance “ is woven into the pro-fessional
values and culture of the
firm.”
The SECPS said each member
firm’s independence policy must re-quire
that its auditors check, before
entering into any financial or business
transaction, to see whether it could
compromise their impartiality.
This requirement also applies to
activities contemplated by an auditor’s
spouse or a dependent. Auditors will
make this determination by consulting
a database of restricted entities, which
the new rules say each member firm
must create and maintain.
The firm’s policies must explain
why, when, and how SEC- registrant
clients and other related entities are
included or excluded from the list.
An auditor, suspecting he or she, a
spouse or a dependent, has violated an
independence policy, must report it in
detail to his or her firm. For its part,
each firm must establish a system to
document such reports and the correc-tive
actions taken in response to them.
The new independence require-ments
can be found on the AICPA web
site at www. aicpa. org/ members/ div/
secps/ inmerefinal. htm
AICPA Strengthens Independence Requirements
DON” T FORGET...
March 1, 2000
Re- Exam Application Deadline
Too often, licensees are confused
as to which rules of ethics apply—
the Rules of Professional Ethics and
Conduct promulgated by the NC
State Board of CPA Examiners or
the Code of Professional Conduct
adopted by the American Institute
of CPAs ( AICPA).
In the majority of instances, North
Carolina CPAs are able to comply
with both sets of rules. In fact, the
Board has adopted specific AICPA
standards such as Auditing Stan-dards,
21 NCAC 8N .0403, and Stan-dards
for Tax Practice, 21 NCAC 8N
.0211. The Board will give consid-eration,
but not necessarily dis-positive
weight, to relevant inter-pretations,
rulings, and opinions is-sued
by appropriately authorized
ethics committees of professional
organizations.
When the AICPA’s rules differ
from the Board’s rules with which
rules should the licensee comply?
The answer is simple— whenever
there is a conflict between the
Board’s rules and the AICPA’s rules,
North Carolina licensees are obli-gated
to comply with 21 NCAC
8N, Rules of Professional Ethics and
Conduct.
6
Advertising or Other Forms of
Solicitation During Tax Season
As tax season swings into high gear,
you or your firm may plan to run ad-vertisements
about your ability to pre-pare
federal or State income tax re-turns.
If you choose to run an ad, be
sure that both you and your firm un-derstand
the Board’s advertising and
forms of solicitation rule, 21 NCAC 8N
.0306, which addresses deceptive ad-vertising
and specialty designations,
before you develop your ad( s).
Foremost, your advertisement
should be accurate and contain mean-ingful
information that is not mislead-ing
or deceptive to consumers. For ex-ample,
you should not use any qualita-tive
or quantitative descriptions, such
as expert or reasonable, which cannot
be documented. After all, the fees that
you deem “ affordable” may not be af-fordable
to everyone who reads your
advertisement.
Your ad may contain the names of
the firm owner( s) and CPAs licensed to
practice in North Carolina; however,
you must distinguish between the CPAs
who are owners and the CPAs consid-ered
professional staff. Although NCGS
93- 9 allows CPA firms to hire assistant
accountants or clerks who are not CPAs,
ads that contain the names of unlicensed
staff members are not allowed. The stat-ute
states that “ such employees work
under the control and supervision of
March 17
April 24
May 22
June 19
July 17
August 21
September 11
October 9
November 20
December 18
Board Meetings
certified public accountants... and do
not hold themselves out as engaged in
the practice of public accounting.” The
public should not be led to believe that
uncertified employees are CPAs.
21 NCAC 8N .0306 addresses the
use of specialty designations in adver-tisements
or other forms of solicitation
by stating, “ A CPA may advertise the
nature of services provided to clients
but the CPA shall not advertise or indi-cate
a specialty designation or other
title unless the CPA has met the re-quirements
of the granting organiza-tion
for the separate title or specialty
designation and the individual is cur-rently
on active status and in good
standing with the granting organiza-tion
for the separate title or specialty
designation.” The Board does not ap-prove
or authorize specialty designa-tions
or separate titles and the use of
the specialty designation is for public
information purposes only.
Be sure that your tax season ads or
solicitations are written in accordance
with the Board’s rule on deceptive ad-vertising
and specialty designations.
Both the public and the CPA
profession’s interests are best served
when firms or individual CPAs take
reasonable steps to avoid advertise-ments
that confuse or mislead consum-ers.
When Ethics Rules Conflict
Spotlight Rule
Dial us Direct
Main Number
( Receptionist)
733- 4222
Professional Standards
( complaints &
professional ethics)
733- 1426
Licensing
( CPA certificate applications,
processing & information)
733- 1422
CPE/ SQR
( CPE, SQR & firm registration)
733- 1423
Examinations
( Exam applications,
processing & information)
733- 4224
Communications
( Activity Review,
press releases & web site)
733- 4208
Administrative Services
( accounting, purchasing &
mailing labels)
733- 4223
7 7
Shelly Denise Adams
Cynthia Combs Allen
Terrie Pope Anders
Nancy Balcom- Moskalik
Jay Bruce Behrens
Courtney Anne Billings
Mac Wayne Billings
Sharon G. Binder
Gregory Wayne Blackmon
Katina Denise Bobbitt
Michael Peter Botzis
Alan Lynn Bray
Catherine M. Brechka
Laurie Long Briggs
Annie L. Brown
Mark Joseph Bryant
Ashley William Carpenter
James Matthew Carroll
Brooke Bare Clark
Jennifer Kaye Clark
Elizabeth Tuttle Cloninger
Matthew C. Coffland
James Paul Cole
Kayce Lynn Collier
Thomas Michael Connotillo
Robert Hayden Crandall
David A. Crooke
Scott Matthew Cryer
Jennifer Acklin Dakin
Jeffrey Richard Daniel
Michael John Dannar
Deborah J. DeBourg- Brown
Jerry O. Denson
Sean Patrick Doherty
Michelle Lynn Eckmann
James Wesley Ellis
Ashley Kathryn Epps
Adaora Angela Eruchalu
Jennifer Louise Farley
Richard W. Fedorowich, Jr.
Salley Billing Fey
James E. Floyd, Jr.
Teresa Ann Foshay
Shannon D. Gamber
Rosalind Dianne Garrison
Tracy Dean Gates
Michael Charles Gerbos
Diana DeForest Gibbs
Betty R. Gillespie
Marya Lynn Goodnight
Sandra Kay Greco
Gerald Roland Green, Jr.
Jeffery Thomas Gregorio
Wayne Robert Gries
Daniel Roy Grover
Meredith Kathleen Hatch
Steven M. Hennen
Christopher Amos Hill
Vicky Denise Hill
Lyn Hittle
Rebecca L. Hoover
P. Lisa Horne
James R. Howe, Jr.
Angela Franklin Hull
William L. Hutchins
James Adrian Jensen
Jonathan David Ingram
Christel Lynn Isenhour
Janice L. Israel
Christy LaShawn Judd
Jennifer McCall Kennedy
Toni Lea Kirby
Kory Lee Kreider
Patricia Kay Kusilka
Kimberly Ewers Laird
John Emil Leinweber
Edmund Michael Lewandowski
Gary Edward Lewis
Kimberly Ann Lewis
Jesse Brian Libensperger
Reginald Brian Lipscomb
Debra L. Lockwood
Matthew Y. L. Loucks
Holly Christina Love
Margaret Rose Magee
Daniel Marcantonio
Jeffrey David McGowan
Charla J. McKinley
Kimberly Anne McMinn
Thomas Oscar Melton
Angela Christine Meredith
Andrew McGuire Messick
Christopher Bround Mills
Rhonda Kay Mills
Dawn Piner Mocnik
Joseph Edmund Molis
Gareth Jeremy Montague- Smith
Amy Ruth Moore
Angela Lane Mooring
Amy Mandrell Morris
Jacqualyn Ann Nelson- Owens
Robert Eric Newman
Patricia Wyant Noblett
Sean Michael Nolan
Jason E. Norman, Jr.
Samuel Richard Odom, Jr.
Amy Leah O’Hara
Tanya Marie O’Neal
Donald Patrick Pagach
Dorothy Teressa Page
Joanna Byrum Page
Cindi Christianson Park
Tammy Burns Payne
Jeanne Sears Perkins
Brian David Peters
Monica Thanh- Thuy Phan
John Robert Prekker
Lesley Anne Price
Rita Duncan Price
Anthony Stephen Proctor
Stacie L. Queen
Kenneth A. Rash
Jennifer Griffin Reiser
Gregory Lane Ritter
Mark Bowman Russell
Andrew Richard Ryder
Dana Ann Sandler
Vinu Satchit
Carol Elizabeth Schaeffer
Stacey L. Schlicker
Kelly A. Schmid
Andrew Marvin Shook
Rita Hunt Sigmon
Kristina Susan Smith
Christopher Allan Smosna
James R. Sorge
Jessica Lynn Spencer
Malinda Warner Spencer
Judith Elizabeth Stalker
Margaret F. Stampley
Casey W. Stansbury
Mark Hawley Stephens
Joelle Thomas Taylor
Margaret S. Thomas
Angela L. Tillman
Barbara Peterson Uricchio
Matthew Werner Wakefield
Shannan Hope Watkins
Shonda Yvette Welch
Patrick Bartholomew Wheeler
Albert Sidney White, III
W. Paul Wickham
Certificates Issued
The following certificate applications were approved at the January 24, 2000, Board meeting:
North Carolina State Board of
Certified Public Accountant Examiners
Post Office Box 12827
Raleigh NC 27605- 2827
Bulk Rate
US Postage
PAID
Greensboro, NC
Permit No. 393
19,900 copies of this document were printed for this agency at a cost of $ 2,822.47 or 14¢ per copy in February 2000.
Certificate holders not notifying the Board in writing within 30 days of any change in address or business location
may be subject to disciplinary action under 21 NCAC 8J .0107.
Address Change? Let Us Know!
Certificate holder
Last name Jr./ III First Middle
Certificate number Send mail to home business
Current home address
City State Zip
Business name
Current bus. address
City State Zip
Telephone: Bus. ( ) Home ( )
Bus. fax ( ) email address
Signature Date
Mail to: N. C. State Board of To fax or email address change:
CPA Examiners CPA Board fax: ( 919) 733- 4209
P. O. Box 12827 Email address:
Raleigh, NC 27605- 2827 licensing@ mindspring. com
State Board of
CPA Examiners
Board Members
R. Stanley Vaughan, CPA
President, Charlotte
O. Charlie Chewning, Jr., CPA
Vice President, Raleigh
Michael H. Wray
Secretary- Treasurer, Gaston
Barton W. Baldwin, CPA
Member, Mount Olive
Norwood G. Clark, Jr., CPA
Member, Raleigh
Scott L. Cox, CPCU, CIC
Member, Charlotte
Walter C. Davenport, CPA
Member, Raleigh
Staff
Executive Director
Robert N. Brooks
Legal Counsel
Noel L. Allen, Esq.
Administrative Services
Felecia Ashe
Lynn Wyatt
Communications
Lisa R. Hearne, Manager
Examinations
Judith E. Macomber, Manager
Phyllis M. Elliott
Licensing
Buck Winslow, Manager
Marie Moss
Alice G. Steckenrider
Professional Standards
Ann Hinkle, Manager
Peggy Pardue
Receptionist
Julia Mayo

Inside this issue...
Advertising Guidelines ................. 6
Certificates Issued .......................... 7
Consent Orders............................... 2
Dial Us Direct.................................. 6
FASB’s Views on Fair Value ......... 5
GASB Revises Standards............... 4
Has Your Address Changed? ....... 4
Independence Requirements ........ 5
Licensing Activity .......................... 4
Notice of Address Change ............ 8
Spotlight Rule ................................. 6
State Tax Forms Get New Look ... 3
Activity Review
North Carolina State
Board of Certified Public
Accountant Examiners
Suite 104, 1101 Oberlin Road, Post Office Box 12827, Raleigh, NC 27605- 2827 ( 919) 733- 4222 No. 2 2000
www. state. nc. us/ cpabd
Important Information for
Successful Exam Candidates
Successful examination candidates who
want to avoid meeting the Board’s 150-
hour education requirement for licen-sure
must submit a properly completed
application for licensure to the Board
prior to December 31, 2000.
The deadline is a result of legisla-tion
passed in July 1997 ( see Activity
Review 8- 1997) which states that to be
eligible to receive a certificate of quali-fication
to practice as a CPA in North
Carolina, individuals who apply for
licensure after December 31, 2000, must
satisfactorily complete 150 semester
hours of college- level coursework in-cluding
a bachelors degree with a con-centration
in accounting.
In addition, the legislation requires
that individuals applying for licensure
after December 31, 2000, must meet at
least one of the following work experi-ence
requirements: one year of experi-ence
in the field of accounting under
the direct supervision of a properly
licensed CPA; four years of experience
in the field of accounting; four years of
experience teaching accounting in a
regionally accredited four- year college
or university; four years of experience
teaching college transfer accounting
courses at a regionally accredited com-munity
college or technical institute; or
any combination of the above experi-ence
determined by the Board to be
substantially equivalent.
These changes in the experience
requirements apply only to applica-tions
for licensure postmarked or re-ceived
after December 31, 2000.
Successful exam candidates will
not be affected by the 150- hour educa-tion
requirement unless they do not:
• complete the current work ex-perience
requirement pursuant to
21 NCAC 8F .0401; and
• submit a completed applica-tion
for certification, including sup-porting
documentation, to the Board
prior to December 31, 2000.
Exam candidates who have not
yet passed all four parts of the exam
will not be affected by this legislation
unless they do not:
• pass all sections of the Uni-form
CPA Examination pursuant to
21 NCAC 8F .0105;
• complete the current work ex-perience
requirement pursuant to
21 NCAC 8F .0401; and
• submit a completed applica-tion
for certification, including sup-porting
documentation, to the Board
prior to December 31, 2000.
Keep in mind, the legislation ap-plies
to certificate applications post-marked
or received after December
31, 2000, and individuals who do not
complete the work experience require-ment
and submit a complete applica-tion
for licensure prior to the deadline
will be required to comply with the
150- hour education requirement be-fore
receiving a North Carolina CPA
certificate.
If you have any questions about
the 150- hour education requirement for
licensure and how it affects exam can-didates,
please visit the Board’s web
site ( www. state. nc. us/ cpabd) and re-view
the in- depth information, includ-ing
the applicable statues and rules, on
the requirement.
If you have questions not answered
by the information on the web site, you
may contact the Board by telephone at
( 919) 733- 4222; by fax at ( 919) 733- 4209;
by e- mail at licensing@ mindspring. com;
or by mail at PO Box 12827, Raleigh,
NC 27605- 2827.
Remember, the 150- hour education
requirement applies to applications for
licensure received after December 31,
2000; the requirement has no bearing
on sitting for the Uniform CPA exam.
2
Consent Orders
Roland S. Hankerson, # 15793
Rocky Mount, NC 12/ 20/ 99
Phillip D. Morgan, # 21809
Birmingham, AL 12/ 20/ 99
THIS CAUSE, coming before the Board
at its offices at 1101 Oberlin Road, Ra-leigh,
Wake County, North Carolina,
with a quorum present. Pursuant to
NCGS 150B- 41 and 150B- 22, the Board
and Respondent stipulate the follow-ing
Findings:
1. Respondent was the holder of North
Carolina certificate number 15793 as a
Certified Public Accountant.
2. On June 22, 1998, the Board ordered
that Respondent’s certificate be sus-pended
for at least thirty ( 30) days for
failure to obtain a State Quality Review
( SQR) prior to the prescribed comple-tion
date. Said Order further stated
that the suspension of Respondent’s
certificate would not be rescinded by
the Board until such time as he pro-vided
the Board with documentation
that his firm’s SQR had been completed.
3. Board staff sent the Board’s Order
by certified/ return receipt mail to Re-spondent
at his last known business
address. Respondent returned his sus-pended
certificate to the Board office
on July 7, 1998.
4. In April of 1999, Respondent filed an
application with the Board for the
reissuance of Respondent’s CPA cer-tificate.
On said application, Respon-dent
indicated that, during the period
of his suspension, he had never
changed his firm’s office sign to delete
reference to his firm as a CPA firm and
continued to offer professional services
as a CPA.
5. With his application, Respondent
submitted a moral character affidavit
from a CPA stating that Respondent
had informed him that he had prob-lems
with his SQR but failed to inform
the CPA signing the affidavit that
Respondent’s certificate was sus-pended
in June of 1998.
6. Respondent wishes to resolve this
matter by consent and agrees that the
Board staff and counsel may discuss
this Order with the Board ex parte,
whether or not the Board accepts this
Order as written.
BASED UPON THE FOREGOING, the
Board makes the following Conclu-sions
of Law:
1. Respondent is subject to the provi-sions
of Chapter 93 of the North Caro-lina
General Statutes ( NCGS) and Title
21, Chapter 8 of the North Carolina
Administrative Code ( NCAC), includ-ing
the Rules of Professional Ethics
and Conduct promulgated and
adopted therein by the Board.
2. Respondent’s actions as set out above
constitute violations of NCGS 93- 3, 93-
4, 93- 6 , and 93- 12( 9) e and 21 NCAC 8N
.0202( b)( 9), .0203( b)( 3).
BASED ON THE FOREGOING and in
lieu of further proceedings under 21
NCAC Chapter 8C, the Board and Re-spondent
agree to the following Order:
1. Respondent is censured.
2. Respondent’s license shall be sus-pended
for one ( 1) year from the date
this Order is approved by the Board;
however, said suspension is stayed.
3. As a condition of the stay of his
suspension, Respondent shall be on
probation, shall comply with the terms
of this Order, and shall violate no ac-countancy
statutes or rules for two ( 2)
years from the date this Order is ap-proved
by the Board.
4. Respondent shall pay a one thou-sand
dollar ($ 1,000.00) civil penalty to
be remitted with this signed Order.
5. Respondent shall reimburse the
Board five hundred dollars ($ 500.00)
in administrative costs incurred in the
costs of this investigation. Said admin-istrative
costs shall be remitted with
this signed Order.
6. Respondent shall obtain preissuance
review of all audits, reviews, and com-pilations
until Respondent’s firm re-ceives
an unqualified opinion on a peer
review which includes a review of at
least one audit, one review, and one
compilation. The reviewer for the
preissuance review shall be approved
by the Board prior to performing said
reviews.
7. Respondent agrees that failure to
timely comply with the terms of this
Order or with all accountancy statutes
and rules during the two ( 2) year pro-bationary
period shall be deemed suf-ficient
grounds for imposition of the
one ( 1) year suspension of
Respondent’s license in addition to any
other discipline as assessed for the fu-ture
violation.
8. Respondent agrees to cooperate at
all times with the Board in the supervi-sion
and investigation of compliance
with this settlement agreement and
agrees to make all files, records, or
other documents available immedi-ately
upon the demand of the Board.
THIS CAUSE, coming before the Board
at its offices at 1101 Oberlin Road,
Raleigh, Wake County, North Caro-lina,
with a quorum present. Pursuant
to NCGS 150B- 41 and 150B- 22, the
Board and Respondent stipulate the
following Findings:
1. Respondent is the holder of North
Carolina certificate number 21809 as a
Certified Public Accountant.
2. Respondent admits the truth of the
factual allegations made against him
in the attached Summons and Com-plaint
issued by the Alabama State
Board of Public Accountancy.
3. Respondent wishes to resolve this
matter by consent and agrees that the
Board staff and counsel may discuss
this Order with the Board ex parte,
whether or not the Board accepts this
Order as written.
BASED UPON THE FOREGOING, the
Board makes the following Conclu-sions
of Law:
1. Respondent is subject to the provi-sions
of Chapter 93 of the North Caro-lina
General Statutes ( NCGS) and Title
21, Chapter 8 of the North Carolina
Administrative Code ( NCAC), includ-ing
the Rules of Professional Ethics
and Conduct promulgated and
adopted therein by the Board.
2. Respondent’s actions as set out
above constitute violations of
3
NCGS 93- 12( 9) d and e, and 21 NCAC
8N .0103, 8N .0201, 8N .0202( a), 8N
.0202( b)( 2), 8N .0203, 8N .0204, 8N. 0402,
and 8N .0403.
BASED ON THE FOREGOING and in
lieu of further proceedings under 21
NCAC Chapter 8C, the Board and Re-spondent
agree to the following Order:
1. Respondent’s license is suspended
until June 24, 2000, to run concurrently
with the suspension of Respondent’s
Alabama certificate. Respondent must
return his North Carolina certificate
with this signed Order.
2. Respondent must comply with all
requirements mandated by his Con-sent
Order with the Alabama State
Board of Public Accountancy.
3. Respondent may, after the reinstate-ment
of his Alabama certificate and
permit to practice, apply to return his
North Carolina certificate to active sta-tus
by submission and approval of a
reissuance application which includes:
a. Application form,
b. Payment of the application fee,
c. 3 moral character affidavits, and
d. 40 hours of CPE in the 12 months
preceding the application including an
8 hour accountancy law course pursu-ant
to 21 NCAC 8F .0504.
4. Respondent agrees to cooperate at
all times with the Board in the supervi-sion
and investigation of compliance
with this settlement agreement and
agrees to make all files, records, or
other documents available immedi-ately
upon the demand of the Board.
Jung Sook Lee, # 19864
Charlotte, NC 1/ 24/ 00
THIS CAUSE, coming before the Board
at its offices at 1101 Oberlin Road, Ra-leigh,
Wake County, North Carolina,
with a quorum present. Pursuant to
NCGS 150B- 41 and 150B- 22, the Board
and Respondent stipulate the follow-ing
Findings:
1. Respondent is the holder of North
Carolina certificate number 19864 as a
Certified Public Accountant and ren-ders
attest services.
2. On September 18, 1995, the Board
ordered, pursuant to 21 NCAC 8J .0011
( currently 8J .0111), that the
Respondent’s certificate be suspended
for at least thirty ( 30) days for failure to
obtain a State Quality Review ( SQR)
prior to the prescribed completion date.
Said Order further stated that the sus-pension
of Respondent’s certificate
would be stayed based Respondent’s
notification that the SQR had been com-pleted.
3. By written notice dated April 22,
1996, and a prior firm renewal notice
provided to Respondent in November
of 1995, Respondent was notified of a
new SQR deadline of September 6, 1998;
however, pursuant to NCGS 93- 12( 8c)
and 21 NCAC 8M .0102( b), Respon-dent
was allowed until December 31,
1998, to complete her second SQR.
4. In November of 1999, Respondent
provided the Board with a copy of her
firm’s peer review letter which was
completed July 28, 1999, in excess of
one hundred twenty ( 120) days after
the required completion date.
5. Respondent wishes to resolve this
matter by consent and agrees that the
Board staff and counsel may discuss
this Order ex parte, whether or not the
Board accepts this Order as written.
BASED UPON THE FOREGOING, the
Board makes the following Conclu-sions
of Law:
1. Respondent is subject to the provi-sions
of Chapter 93 of the North Caro-lina
General Statutes ( NCGS) and Title
21, Chapter 8 of the North Carolina
Administrative Code ( NCAC), includ-ing
the Rules of Professional Ethics
and Conduct promulgated and
adopted therein by the Board.
2. Respondent’s failure to timely ob-tain
a SQR prior to the prescribed
completion date is a violation of NCGS
93- 12( 8c) and 21 NCAC 8M .0102.
BASED ON THE FOREGOING and in
lieu of further proceedings under 21
NCAC Chapter 8C, the Board and Re-spondent
agree to the following Order:
1. Respondent’s certificate is sus-pended
for ninety ( 90) days.
2. Respondent shall return her sus-pended
certificate to the Board along
with the submission of this Consent
Order.
3. After at least ninety ( 90) days, Re-spondent
may apply to return her cer-tificate
to active status by submission
and approval of a reissuance applica-tion
which includes:
a. Application form,
b. Payment of the application fee,
c. 3 moral character affidavits, and
d. 40 hours of CPE in the 12 months
preceeding the application including
an 8 hour accountancy law course pur-suant
to 21 NCAC 8F .0504.
State Tax Forms Get
New Look
State taxpayers will notice something
different about their 1999 North
Carolina Individual Income Tax
forms.
Starting this year, the North
Carolina Department of Revenue
( DOR) will use a new, state- of- the
art electronic system to process
North Carolina Individual Income
tax returns and payments. Although
most questions are still the same, the
forms’ designs are different.
Some things taxpayers will no-tice
on the new forms include bar
codes ( a system of thick and thin
lines used to store information elec-tronically)
along the edge of the
forms; rectangles where numbers
should be written; and circles to be
filled in as responses to some ques-tions.
Taxpayers with questions can
call ( 919) 733- 4684 Monday through
Friday from 8 a. m. to 5 p. m. to reach
someone at the DOR. “ NC Tax Talk,”
a prerecorded information line, is
available 24 hours a day. The num-ber
is ( 919) 733- 4829.
4
Reissuances
Michael Keith Eastwood # 18783
Lake Warren Woods, Jr. # 12926
Reinstatements
Stanley Wayne Belk # 19722
Walter Greene Church, Jr. # 16076
Douglas Younge Cobb # 7959
Dennis Allen Hayes # 20963
Saundra Gail Holloman # 22217
Bruce Johnson Lamond # 12879
Richard Webb Pipes # 9507
Penny Brooks Russ # 13604
CPE Sponsors
Interactive Business Solutions-
Salisbury
Mark R. Kean- Raleigh
Moss Adams Advisory Services-
Seattle, WA
UNC- W Dept. of Accounting &
Business Law- Wilmington
Licensing Activity
January 2000 In a move that broadens the recent
historic changes in governmental ac-counting
to encompass public colleges
and universities, the Governmental
Accounting Standards Board ( GASB)
published new standards for external
financial reporting by these institutions.
Public colleges and universities
will now follow the financial reporting
standards the GASB approved in June
1999, which considerably revised the
look and contents of state and local
government financial statements.
“ The objective of the new stan-dards
is to enhance the understand-ability
and usefulness of public college
and university financial statements,”
said GASB Project Manager Joseph
Blythe.
“ GASB believes that the informa-tion
provided will better meet the needs
of those who use financial reports is-sued
by institutions of higher educa-tion.”
The new standards— known as
GASB Statement No. 35, “ Basic Financial
Statements and Management’s Discussion
and Analysis for Public Colleges and Uni-versities,”
amend GASB Statement No.
34, which dramatically changed how
state and local governments report their
finances.
Statement No. 35 effectively ex-tends
the guidance of the new govern-mental
financial reporting model to
include public colleges and universi-ties.
According to the new standards,
the separately issued financial state-ments
of public colleges and universi-ties
will include:
• Management’s discussion
and analysis: a narrative overview
and analysis, prepared by the
institution’s finance officers, of the
information in the institution’s fi-nancial
statements focusing on the
reasons for changes in the public
institution’s financial position from
one year to the next;
• Basic financial statements:
public colleges and universities will
prepare the appropriate financial
statements stipulated by Statement
34 for special- purpose governments
engaged in ( a) business- type activi-ties;
( b) government- type activities;
or ( c) both; and
• Notes to the financial statements.
One of the most significant changes
for public colleges and universities is
the requirement to amortize capital
asset costs over the useful lives of those
assets. This cost allocation should pro-vide
a better measure of the costs of
providing instruction, research, and
other services.
This more business- like approach
is currently required for private col-leges
and universities and should bring
more financial reporting comparabil-ity
to the higher education industry.
Financial reporting under these
new standards should give a clearer
picture of the overall financial health
of public colleges and universities.
According to Blythe, the new stan-dards
for public colleges and universi-ties
should provide more and better
information for a wider range of users
than was previously available.
“ The information will also be more
comparable to the financial statements
of private colleges and universities,”
he explained.
Colleges and universities that are
a unit of a state or local government
will implement the new standards at
the same time as their primary govern-ment,
generally for fiscal years begin-ning
July 1, 2001.
Copies of GASB Statement No. 35,
“ Basic Financial Statements and
Management’s Discussion and Analysis
for Public Colleges and Universities,” are
available from the GASB Order De-partment
via telephone ( 1- 800- 748-
0659), e- mail ( gasbpubs@ gasb. org), and
mail ( 401 Merritt 7, PO Box 5116,
Norwalk CT 06856- 5116).
GASB Revises Public College and University
Financial Reporting Standards
21 NCAC 8J .0107 requires written
notice of any change of address or
business location. Because the rule
requires that the notification be
made in writing, staff members can-not
accept an oral change of ad-dress.
You may mail or fax the “ Notice of
Address Change” located on the
back cover of the Activity Review to
the Board’s Licensing Section. You
may also e- mail the change( s) to
licensing@ mindspring. com.
Exam candidates should also no-tify
the Board of any changes in
their address or phone number. Sim-ply
mail or fax the “ Notice of Ad-dress
Change” to the Examinations
Section of the Board. You may also
e- mail the change( s) to
examinations@ mindspring. com.
Has Your Address Changed?
5
FASB Offers Views on Fair Value
The Financial Accounting Standards
Board ( FASB) has published its pre-liminary
views on measuring finan-cial
instruments at fair value. The
document is the next step in a FASB
project related to financial instrument
issues.
The preliminary views cover
three core issues— what would be re-ported
at fair value; what is fair value;
and how would changes in fair value
be reported.
According to FASB’s preliminary
views, financial instruments, as de-fined
in the document, would be mea-sured
and recorded at fair value.
Financial instruments are defined
as cash; ownership interest in an en-tity;
contractual obligations to deliver
financial instruments to another en-tity
and that entity’s contractual rights
to receive them; or contractual obli-gations
for one entity to exchange
financial instruments with another and
the second entity’s contractual rights
to require the exchange.
Fair value of a financial instrument
would be its estimated market exit
price. The issue of where to report
changes in fair value may become moot
if FASB decides that enhanced disclo-sure
alone is sufficient. However, if
FASB decides to require reporting
changes in fair value, those changes
would be reported in net income.
According to Ron Lott, a FASB
project manager, FASB is “ committed
to working toward resolving the con-ceptual
and practical issues related to
determining the fair value of financial
instruments, an effort discussed in
FASB Statement 133 on derivatives.”
“ Although FASB members see
conceptual reasons to measure finan-cial
instruments at fair value, they have
not decided when, if ever, it will be
feasible to require them to be re-ported
at fair value in the basic finan-cial
statements,” explained Lott.
“ Although it has made prelimi-nary
decisions about the definitions
of financial instruments and fair value
and general guidance for determin-ing
fair value,” Lott said, “ FASB
needs more information about the
potential problems and solutions for
reporting financial instruments at fair
value. Publishing FASB’s prelimi-nary
views at this time is intended to
solicit that information.”
Copies of the preliminary views
are available from the FASB web site
( www. fasb. org) under “ Exposure
Drafts” or from the FASB Order De-partment
at 1- 800- 748- 0659. Com-ments
on the preliminary views are
requested by May 31, 2000.
The American Institute of CPAs
( AICPA) has strengthened its indepen-dence
requirements for auditors of
public companies.
New rules, which the executive
committee of the SEC practice section
of the AICPA division for firms ( SECPS)
approved and which are intended to
bolster investor confidence in financial
reporting, took effect January 1, 2000.
The rules address business and fi-nancial
relationships that could create
a conflict of interest and undermine
auditor independence if entered into
by an auditor, his or her spouse, or a
dependent.
Each of the SECPS’s 1,300 member
firms is required to establish a policy
prohibiting auditors from engaging in
such relationships.
Each firm also must designate as
its “ independence champion” a part-ner
who will see that the professional
audit staff has all the information
needed to comply with the new rules.
In addition, all audit professionals
must, when they are hired and after-ward,
undergo training in the new re-quirements,
attend periodic refresher
courses and certify that they have read,
understood and complied with the
firm’s independence policy.
Susan Coffey, AICPA vice presi-dent
of self- regulation and the SECPS,
said, “ Independence and related qual-ity
controls are ‘ top of mind’ for the
profession.” She stressed the need for
SECPS member firms’ leadership to set
the ‘ appropriate tone’ and make cer-tain
compliance “ is woven into the pro-fessional
values and culture of the
firm.”
The SECPS said each member
firm’s independence policy must re-quire
that its auditors check, before
entering into any financial or business
transaction, to see whether it could
compromise their impartiality.
This requirement also applies to
activities contemplated by an auditor’s
spouse or a dependent. Auditors will
make this determination by consulting
a database of restricted entities, which
the new rules say each member firm
must create and maintain.
The firm’s policies must explain
why, when, and how SEC- registrant
clients and other related entities are
included or excluded from the list.
An auditor, suspecting he or she, a
spouse or a dependent, has violated an
independence policy, must report it in
detail to his or her firm. For its part,
each firm must establish a system to
document such reports and the correc-tive
actions taken in response to them.
The new independence require-ments
can be found on the AICPA web
site at www. aicpa. org/ members/ div/
secps/ inmerefinal. htm
AICPA Strengthens Independence Requirements
DON” T FORGET...
March 1, 2000
Re- Exam Application Deadline
Too often, licensees are confused
as to which rules of ethics apply—
the Rules of Professional Ethics and
Conduct promulgated by the NC
State Board of CPA Examiners or
the Code of Professional Conduct
adopted by the American Institute
of CPAs ( AICPA).
In the majority of instances, North
Carolina CPAs are able to comply
with both sets of rules. In fact, the
Board has adopted specific AICPA
standards such as Auditing Stan-dards,
21 NCAC 8N .0403, and Stan-dards
for Tax Practice, 21 NCAC 8N
.0211. The Board will give consid-eration,
but not necessarily dis-positive
weight, to relevant inter-pretations,
rulings, and opinions is-sued
by appropriately authorized
ethics committees of professional
organizations.
When the AICPA’s rules differ
from the Board’s rules with which
rules should the licensee comply?
The answer is simple— whenever
there is a conflict between the
Board’s rules and the AICPA’s rules,
North Carolina licensees are obli-gated
to comply with 21 NCAC
8N, Rules of Professional Ethics and
Conduct.
6
Advertising or Other Forms of
Solicitation During Tax Season
As tax season swings into high gear,
you or your firm may plan to run ad-vertisements
about your ability to pre-pare
federal or State income tax re-turns.
If you choose to run an ad, be
sure that both you and your firm un-derstand
the Board’s advertising and
forms of solicitation rule, 21 NCAC 8N
.0306, which addresses deceptive ad-vertising
and specialty designations,
before you develop your ad( s).
Foremost, your advertisement
should be accurate and contain mean-ingful
information that is not mislead-ing
or deceptive to consumers. For ex-ample,
you should not use any qualita-tive
or quantitative descriptions, such
as expert or reasonable, which cannot
be documented. After all, the fees that
you deem “ affordable” may not be af-fordable
to everyone who reads your
advertisement.
Your ad may contain the names of
the firm owner( s) and CPAs licensed to
practice in North Carolina; however,
you must distinguish between the CPAs
who are owners and the CPAs consid-ered
professional staff. Although NCGS
93- 9 allows CPA firms to hire assistant
accountants or clerks who are not CPAs,
ads that contain the names of unlicensed
staff members are not allowed. The stat-ute
states that “ such employees work
under the control and supervision of
March 17
April 24
May 22
June 19
July 17
August 21
September 11
October 9
November 20
December 18
Board Meetings
certified public accountants... and do
not hold themselves out as engaged in
the practice of public accounting.” The
public should not be led to believe that
uncertified employees are CPAs.
21 NCAC 8N .0306 addresses the
use of specialty designations in adver-tisements
or other forms of solicitation
by stating, “ A CPA may advertise the
nature of services provided to clients
but the CPA shall not advertise or indi-cate
a specialty designation or other
title unless the CPA has met the re-quirements
of the granting organiza-tion
for the separate title or specialty
designation and the individual is cur-rently
on active status and in good
standing with the granting organiza-tion
for the separate title or specialty
designation.” The Board does not ap-prove
or authorize specialty designa-tions
or separate titles and the use of
the specialty designation is for public
information purposes only.
Be sure that your tax season ads or
solicitations are written in accordance
with the Board’s rule on deceptive ad-vertising
and specialty designations.
Both the public and the CPA
profession’s interests are best served
when firms or individual CPAs take
reasonable steps to avoid advertise-ments
that confuse or mislead consum-ers.
When Ethics Rules Conflict
Spotlight Rule
Dial us Direct
Main Number
( Receptionist)
733- 4222
Professional Standards
( complaints &
professional ethics)
733- 1426
Licensing
( CPA certificate applications,
processing & information)
733- 1422
CPE/ SQR
( CPE, SQR & firm registration)
733- 1423
Examinations
( Exam applications,
processing & information)
733- 4224
Communications
( Activity Review,
press releases & web site)
733- 4208
Administrative Services
( accounting, purchasing &
mailing labels)
733- 4223
7 7
Shelly Denise Adams
Cynthia Combs Allen
Terrie Pope Anders
Nancy Balcom- Moskalik
Jay Bruce Behrens
Courtney Anne Billings
Mac Wayne Billings
Sharon G. Binder
Gregory Wayne Blackmon
Katina Denise Bobbitt
Michael Peter Botzis
Alan Lynn Bray
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Laurie Long Briggs
Annie L. Brown
Mark Joseph Bryant
Ashley William Carpenter
James Matthew Carroll
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Elizabeth Tuttle Cloninger
Matthew C. Coffland
James Paul Cole
Kayce Lynn Collier
Thomas Michael Connotillo
Robert Hayden Crandall
David A. Crooke
Scott Matthew Cryer
Jennifer Acklin Dakin
Jeffrey Richard Daniel
Michael John Dannar
Deborah J. DeBourg- Brown
Jerry O. Denson
Sean Patrick Doherty
Michelle Lynn Eckmann
James Wesley Ellis
Ashley Kathryn Epps
Adaora Angela Eruchalu
Jennifer Louise Farley
Richard W. Fedorowich, Jr.
Salley Billing Fey
James E. Floyd, Jr.
Teresa Ann Foshay
Shannon D. Gamber
Rosalind Dianne Garrison
Tracy Dean Gates
Michael Charles Gerbos
Diana DeForest Gibbs
Betty R. Gillespie
Marya Lynn Goodnight
Sandra Kay Greco
Gerald Roland Green, Jr.
Jeffery Thomas Gregorio
Wayne Robert Gries
Daniel Roy Grover
Meredith Kathleen Hatch
Steven M. Hennen
Christopher Amos Hill
Vicky Denise Hill
Lyn Hittle
Rebecca L. Hoover
P. Lisa Horne
James R. Howe, Jr.
Angela Franklin Hull
William L. Hutchins
James Adrian Jensen
Jonathan David Ingram
Christel Lynn Isenhour
Janice L. Israel
Christy LaShawn Judd
Jennifer McCall Kennedy
Toni Lea Kirby
Kory Lee Kreider
Patricia Kay Kusilka
Kimberly Ewers Laird
John Emil Leinweber
Edmund Michael Lewandowski
Gary Edward Lewis
Kimberly Ann Lewis
Jesse Brian Libensperger
Reginald Brian Lipscomb
Debra L. Lockwood
Matthew Y. L. Loucks
Holly Christina Love
Margaret Rose Magee
Daniel Marcantonio
Jeffrey David McGowan
Charla J. McKinley
Kimberly Anne McMinn
Thomas Oscar Melton
Angela Christine Meredith
Andrew McGuire Messick
Christopher Bround Mills
Rhonda Kay Mills
Dawn Piner Mocnik
Joseph Edmund Molis
Gareth Jeremy Montague- Smith
Amy Ruth Moore
Angela Lane Mooring
Amy Mandrell Morris
Jacqualyn Ann Nelson- Owens
Robert Eric Newman
Patricia Wyant Noblett
Sean Michael Nolan
Jason E. Norman, Jr.
Samuel Richard Odom, Jr.
Amy Leah O’Hara
Tanya Marie O’Neal
Donald Patrick Pagach
Dorothy Teressa Page
Joanna Byrum Page
Cindi Christianson Park
Tammy Burns Payne
Jeanne Sears Perkins
Brian David Peters
Monica Thanh- Thuy Phan
John Robert Prekker
Lesley Anne Price
Rita Duncan Price
Anthony Stephen Proctor
Stacie L. Queen
Kenneth A. Rash
Jennifer Griffin Reiser
Gregory Lane Ritter
Mark Bowman Russell
Andrew Richard Ryder
Dana Ann Sandler
Vinu Satchit
Carol Elizabeth Schaeffer
Stacey L. Schlicker
Kelly A. Schmid
Andrew Marvin Shook
Rita Hunt Sigmon
Kristina Susan Smith
Christopher Allan Smosna
James R. Sorge
Jessica Lynn Spencer
Malinda Warner Spencer
Judith Elizabeth Stalker
Margaret F. Stampley
Casey W. Stansbury
Mark Hawley Stephens
Joelle Thomas Taylor
Margaret S. Thomas
Angela L. Tillman
Barbara Peterson Uricchio
Matthew Werner Wakefield
Shannan Hope Watkins
Shonda Yvette Welch
Patrick Bartholomew Wheeler
Albert Sidney White, III
W. Paul Wickham
Certificates Issued
The following certificate applications were approved at the January 24, 2000, Board meeting:
North Carolina State Board of
Certified Public Accountant Examiners
Post Office Box 12827
Raleigh NC 27605- 2827
Bulk Rate
US Postage
PAID
Greensboro, NC
Permit No. 393
19,900 copies of this document were printed for this agency at a cost of $ 2,822.47 or 14¢ per copy in February 2000.
Certificate holders not notifying the Board in writing within 30 days of any change in address or business location
may be subject to disciplinary action under 21 NCAC 8J .0107.
Address Change? Let Us Know!
Certificate holder
Last name Jr./ III First Middle
Certificate number Send mail to home business
Current home address
City State Zip
Business name
Current bus. address
City State Zip
Telephone: Bus. ( ) Home ( )
Bus. fax ( ) email address
Signature Date
Mail to: N. C. State Board of To fax or email address change:
CPA Examiners CPA Board fax: ( 919) 733- 4209
P. O. Box 12827 Email address:
Raleigh, NC 27605- 2827 licensing@ mindspring. com
State Board of
CPA Examiners
Board Members
R. Stanley Vaughan, CPA
President, Charlotte
O. Charlie Chewning, Jr., CPA
Vice President, Raleigh
Michael H. Wray
Secretary- Treasurer, Gaston
Barton W. Baldwin, CPA
Member, Mount Olive
Norwood G. Clark, Jr., CPA
Member, Raleigh
Scott L. Cox, CPCU, CIC
Member, Charlotte
Walter C. Davenport, CPA
Member, Raleigh
Staff
Executive Director
Robert N. Brooks
Legal Counsel
Noel L. Allen, Esq.
Administrative Services
Felecia Ashe
Lynn Wyatt
Communications
Lisa R. Hearne, Manager
Examinations
Judith E. Macomber, Manager
Phyllis M. Elliott
Licensing
Buck Winslow, Manager
Marie Moss
Alice G. Steckenrider
Professional Standards
Ann Hinkle, Manager
Peggy Pardue
Receptionist
Julia Mayo